(WITHVIDEO; UPDATED 11/17)FRANKFORT — Republican state Senate President David Williams and Democratic House Speaker Greg Stumbo said the Passport program should return misused funds to Medicaid and called for more oversight of the managed care provider.

But both insisted that recent findings in a state audit about Passport’s spending should not sour the state on using managed care set-ups to provide Medicaid services in the future.

Williams, who is running for governor, had the strongest words for Gov. Steve Beshear’s administration and specifically the Health and Family Services Cabinet that is supposed to oversee the contract with Passport. The state has a nearly $800 million contract with Passport to provide Medicaid services — health care to the poor and disabled — in the Louisville metro area.

The leaders, speaking during at an interim committee meeting regarding finding efficiencies in Medicaid, both said cabinet officials weren’t doing enough to prevent the misuse of funds at Passport.

And while both leaders said they support expanding managed care services throughout the state as a means to provide services and save money, Williams said that in order to do so, more oversight was needed. And that includes giving more power to a legislative committee in order to make sure that oversight is accomplished, he said.

The audit of Passport, released by state Auditor Crit Luallen last week, questioned expenses on travel, entertainment and lobbying. In addition, the audit said the program gave favorable treatment to the hospitals, including Jewish Hospital and University of Louisville Hospital, that helped establish the managed care program.

Overall, Luallen said the health cabinet would need to perform a deeper analysis to evaluate whether Passport saves the state Medicaid program money.

The program’s leaders have kept a low profile since the audit but have denied wrongdoing.

Beshear directed Health Cabinet Secretary Janie Miller to perform a more detailed audit of the contract. Cabinet officials have acknowledged that the cabinet didn’t keep tabs on Passport’s spending. They have said they were more focused on making sure the program was providing proper health care.

On Monday, Beshear proposed using more managed care providers, like Passport, to help curb the cost of Medicaid on the state’s budget. Beshear said using more managed care providers would balance the state’s Medicaid budget by 2012.

Williams said such arrangements could work but only with the proper amount of scrutiny.

And while Williams, who could potentially face Beshear in the 2011 general election for governor, accused the Beshear administration of inadequate oversight, Stumbo did not.

The Democratic leader in the state House said he suspected that the abuse of funds went back since the beginning of Passport and throughout previous administrations. Stumbo encouraged the administration to retrieve the misused funds as allowed in Passport’s contract, or if necessary, work with the attorney general to have the program return the money to the state’s coffers.

Beshear has said that his administration will ask for corrective action from the Passport board and will step up oversight of private managed care programs as a result of the Passport audit.

UPDATED (11/17 at 10:32 a.m.)

Yesterday afternoon, Beshear hit back at Williams’ comments from the committee meeting in a statement.

“It is also not surprising that Senator Williams is defending Passport. After all, he led the charge of inserting language in the budget that would have prohibited me from reducing their contract. I was not surprised by his action, since some of Passport’s excessive spending included sponsoring a reception for the Republican Senate majority. In spite of the pressures brought on the Cabinet by Senator Williams and others with their intensive Passport lobbying efforts, the Cabinet has significantly limited the growth in the Passport contract over the last three years.”